In the race to decarbonization and achieving net-zero emissions, there is a clear role to be played by governments, individuals, NGOs and companies.
In this article I describe why I believe in the leadership role of Corporate Sector.
I argued that the private sector is a principal driver of decarbonization, reducing carbon emissions, due to three reasons:
- First, corporates are flocking to adopt net-zero emissions.
- Second companies have the tools and resources to implement the change.
- And finally, companies have a key position to influence different parts of our society.
3 reasons for companies leading decarbonization
First: net-zero momentum
Climate change is one of the major threats humanity has ever faced, and solving it requires drastic reductions of carbon emissions.
In particular, in order to limit global warming to 1.5 degrees Celsius, we need to achieve net-zero before 2050.
Companies, mostly after the 2015 Paris Agreement, have increasingly jumped into decarbonization and committed to carbon neutrality before 2050.
As an example, 155 companies worth US$2.4 trillion have pledged under the SBTi to align their emissions reductions to the latest climate science. Some reasons are reducing climate-related risks, reduce costs and attract capital and talent.
Second: Resources for Decarbonization
Companies have budgets to invest, skilled professionals and access to experts from universities and R&D institutes. These resources allow them to be ahead in the curve of the energy transition.
Above all, setting a net-zero emission target creates an incredible excitement from employees in the organization that want to to help. Companies increase their efforts in energy efficiency or sourcing and investing in renewable energy (read about sourcing green energy here).
From the product design to the material sourcing or discussing with consumers and investors, carbon reductions are becoming an integral part of companies.
Third: Strategic position
Companies have employees, face investors, listen and interact with consumers, operate trans-nationally and source products and services from suppliers. To start with, companies embedding carbon neutrality are catalysing the development of new clean technologies.
On top of that, companies have the capability to influence policymakers and help them shape legislation that accelerates the economy’s decarbonization.
For example, companies can demand and support governments that pair recovery from COVID19 with climate action. This will ensure that economies emerge stronger than before (‘build back better’).
Moreover, corporates increase confidence in investors, consumers, and employees by sharing their transparently their progress.
Finally, sustainability leadership and ambition is cascaded down to corporates’ suppliers (you can read how here).
As an example, it is normal for a multinational company to source from 40,000 to 100,000 suppliers. Corporates support their suppliers in reducing their carbon emissions.
Above all, companies have the privilege and responsibility to influence these groups to make our world carbon achieve net-zero emissions.
As a conclusion.
Because of the net-zero momentum, resources and position, companies have the responsibility play a key role in the transition to a low-carbon economy.
The success will require the right policies and incentives by governments. Will need investors building climate-resilient portfolios.
Most importantly, the success of reducing emissions will require consumers changing their behaviours and making the right choices when choosing the products they buy.
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